IDC expects 35% of APEJ companies to use AI in ESG reporting in 2024

30 / 01 / 2024

By Marwa Nassar - -

The International Data Corporation (IDC) released a report predicting that 2024 will witness 35% of companies and public service institutions in the Asia/Pacific Excluding Japan (APEJ) region leveraging AI technology to advance their ESG metrics and data management beyond reporting capabilities to generate sustainability-driven cost benefits and competitive advantages.

In the report, IDC FutureScape: Worldwide Sustainability/ESG 2024 Predictions — Asia/Pacific (Excluding Japan) Implications, IDC sustainability research has always placed AI as a cornerstone technology in unlocking the full value of ESG data.

In a survey conducted in August 2023, technology buyers in Asia/Pacific Excluding Japan (APEJ) ranked AI and its derivatives as the number one most useful innovative technology to meet their sustainability/ESG objectives.

Furthermore, 46% of APEJ enterprises find GenAI particularly useful in ESG data analysis.

AI is predicted to remain a critical technology in the operationalization of ESG in 2024 and beyond.

By 2025, 25% of ESG review boards in APEJ will include ethical and responsible oversight of AI efforts in their purview.

By 2026, AI-powered demand forecasting will reduce excess inventory levels by 20% minimizing waste and lowering carbon emissions from excess production, according to the report.

In addition to the growing role of AI in meeting sustainability/ESG objectives, IDC also noticed that APEJ organizations are in a cusp of a great shift which will lead to more demand for sustainability and ESG-enabling technologies and related business services.

IDC’s sustainability surveys are showing accelerated adoption of sustainability/ESG in the region in the last 12 months, much faster than anywhere else in the world.

From 2024 and beyond, IDC expected decarbonization, circularity, social sustainability and biodiversity to figure high in sustainability/ESG in the region.

By 2027, 50% of large organizations in APEJ will require a carbon neutrality strategy as a standard part of enterprise technology procurements and RFPs as compared with 40% today.

By 2024, 50% of APEJ organizations will require OEMs/ODMs – original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM) to provide detailed circularity metrics about design, manufacturing, life cycle, repair, reuse, and disposal in dashboards to facilitate reporting, the report said.

By 2028, 30% of APEJ companies will track social capital KPIs (e.g., human rights management) to reflect the increasing demand from external stakeholders to address social sustainability topics, added the report.

By 2027, 25% of APEJ companies will consider biodiversity a material ESG issue for their business and will have put in place concrete impact mitigation strategies and data management tools.

By 2027, due to increased focus on climate risk, 80% of all sustainability-related services engagements will include a climate risk component, a 30% increase from the present.

By 2026, 35% of all datacenter energy consumption in APEJ will be powered by renewables.

By 2028, companies most advanced with sustainable business transformation (~10–20%) will have sustainability embedded across the organization, and CSOs will have only coordination role.

“Over 90% of enterprises in the region are currently navigating their sustainability journey, responding to global and local regulatory pressures and the need to stay competitive. Manufacturing, logistics, ICT, financial services sectors, as well as public sector institutions, such as government, education and healthcare, are increasingly reliant on digital technology solutions and ESG-related consultancy services to get them started or help them advance in sustainability maturity. IDC foresees a rapid expansion of sustainability tech applications in the near-term, expanding use-cases and scope of material topics,” said Melvie Espejo, Research Director, Sustainability Strategies and Technologies, IDC Asia/Pacific.